PSX remains under pressure as shares lose nearly 1,500 points
Bears maintained their hold on the Pakistan Stock Exchange (PSX) on Tuesday as shares lost nearly 1,500 points.
The benchmark KSE-100 index declined by 1,489.96 points, or 1.31 per cent, to close at 112,030.36 points from the previous close of 113,520.32.
Yousuf M. Farooq, director research at Chase Securities, said, “The market opened under pressure today following a news report yesterday in which the petroleum minister stated that Rs82 billion from the profits of state-owned companies would be used to shield consumers from rising gas costs.”
He said the remarks “raised concerns among market participants that the government may revert to using state-owned enterprises (SOEs) to appease the public, echoing past practices”.
However, he believed “that such an action may not be legally feasible”.
Moreover, Farooq said that the market appeared to be “taking a breather” after witnessing a significant rally from October to December last year, adding that such corrections were normal.
“Nonetheless, the petroleum minister’s remarks have added to investor caution,” he added.
Awais Ashraf, director research at AKD Securities, noted that investors were concerned over the Trump administration’s decision to suspend aid being provided by the United States to Pakistan.
Last week, the US, the world’s biggest donor, froze virtually all foreign aid, making exceptions only for emergency food, and military funding for Israel and Egypt.
Secretary of State Marco Rubio sent an internal memo days after President Donald Trump took office vowing an “America First” policy of tightly restricting assistance overseas.
“However, this issue is not exclusive to Pakistan but extends to all countries,” Ashraf highlighted, adding that that was not going much of an “impact on our balance of payments as — unlike in the past — US grants now represent only a small fraction of external funding for FY25”.
He highlighted that the total grants allocated for the Fiscal Year 2025 (FY25) amounted to just $176 million, which represented 1pc of the total external funding target of $19.34 billion.
“Interestingly, Pakistan received $38.3 million in grants from the US during the first five months of FY25,” he said, adding that this exceeded the budgeted $21m for the full year.
He added: “Furthermore, there are no allocations for bilateral loans from the US in FY25.”
Meanwhile, Mohammed Sohail, chief executive of Topline Securities, attributed the bearish momentum to January’s rollover and lower-than-expected results putting pressure on the market.
Yesterday, despite strong anticipation of a sixth straight cut in the interest rate at the monetary policy review meeting, stocks had witnessed a roller-coaster session mainly due to political instability, a hike in gas tariffs and disappointing corporate results.
The Economic Coordination Committee’s decision to increase the gas tariff by almost 17pc for captive power plants was noted to be the key depressant. This move drew a strong reaction from the export-oriented players, especially the textile sector, saying this move would hurt the country’s export competitiveness in the regional and international markets.
More to follow
